FCA proposes changes to facilitate investment in patient capital

The Financial Conduct Authority (FCA) has today proposed changes to further enable retail investors to invest in patient capital through unit-linked funds. The FCA is also exploring how UK authorised funds can be used to invest in patient capital.

These proposals follow the 2018 Budget when the Chancellor announced a package of measures designed to increase investment in patient capital, a term for a broad range of alternative investment assets intended to deliver long-term returns; for example, infrastructure, real estate, private equity/debt, and venture capital.

The proposed changes in the consultation paper are intended to enable retail investors to invest in a broader range of long-term assets through unit-linked funds, while continuing to maintain an appropriate level of protection. The proposed measures aim to address potential barriers to investment by retail investors in patient capital, and will be beneficial to consumers by allowing funds to choose investment opportunities that match the needs of consumers more effectively.

Alongside this, a discussion paper explores how UK authorised funds can be used to invest in patient capital. It sets out the relevant authorised funds rules, and outlines the existing opportunities to invest in patient capital. It invites feedback to help identify the barriers to investment in patient capital through authorised funds and how such barriers can be overcome. The DP does not propose any changes to the authorised fund rules. Instead, the FCA will consider responses and consult more widely with industry stakeholders to come to an informed view on whether any rule changes are necessary.